Right now the Lebanon real estate market is a smorgasbord for buyers with decent credit and a little cash. Homes are selling for several dollars less per square-foot compared to last year and are lingering longer on the market before selling - creating motivated sellers.

From Jan. 1 to June 1, 2008, the average selling price for new homes was $118 a square-foot, down from a $134 a square-foot for the same time in 2007. Prices for existing residential properties - houses on an acre or less - fell from $115 a square-foot to $110. The number of existing and new residential homes sold in the first five months is half of what it was last year. Existing homes, both with and without acreage, are staying on the market about three weeks longer, and new homes are taking about six weeks longer to sell this year, according to the Willamette Valley Multiple Listing Service.

Local real estate professionals say that uncertainty about the economy is one factor in the market slow down. Another is the national media hype surrounding a wave of foreclosures that has swept other states. The foreclosure rate in Oregon is sixth lowest in the nation according, to

the Mortgage Bankers Association.

"What people are getting from the media is all doom and gloom," said Betty Schmidt, senior loan officer at Pacific Crest Home Loans in Lebanon. "What they aren't getting from the media is historically how well placed we are with interest rates (currently about 5.8 percent). For people who have never seen 12 or 13 percent interest rates, the idea that interest rates might go to 6.5 percent seems really high."

Heritage Northwest Real Estate broker Laura Pyle Gillott concurs that media coverage is making buyers wary, even in areas where property values are holding steady.

"The national media talks about the market as a whole, but there are pockets where the market is still doing well, and Lebanon is in the pocket and so is Portland," Gillott said.

Coldwell Banker broker Kent Haworth believes the Lebanon market is suffering a ripple effect from states where foreclosures have jumped while property values have plummeted.

"Of course it affects Lebanon if people in southern California who want to move here can't sell their homes," Haworth said.

Gillott and Haworth both say current market conditions favor buyers, particularly on new homes.

"There's a large inventory of new construction built 2007 in anticipation of a hot market," Haworth said. "Houses sitting empty are a drain on builders' finances. They're motivated to sell."

According to numbers provided by Haworth, 57 new homes built in 2007 remain on the market today. That number may be larger because with houses selling for less than expected when they were built, some builders may try to save a six percent fee by not going through a broker to sell their properties.

A glut of unsold new homes has slowed construction activity in Lebanon. Records show only 11 building permits for single-family residences issued by the city of Lebanon in the first five months of 2008. During the same period last year, 37 permits were issued.

Short sales - where rather than face a long foreclosure process, builders have given the deed to the house to the bank that put up the money for construction - can be particularly good deals. Some lenders are willing to take less than the amount owed on the property, Haworth said.

Financial institutions have tightened up lending guidelines, but with good credit and money for a down payment, in many cases as little as three-percent, financing is available.

It's a little more challenging with the new guidelines," said Schmidt at Pacific Crest Home Loans, "and we're telling brokers to allow 45 to 60 days to close the deal in case there are conditions that come up we need to address."

Haworth said that with a three percent down payment requirement, FHA loans fell out of favor when 100 percent financing was readily available, but are seeing surge in popularity lately. Because they are federally insured, FHA loans do not require mortgage insurance, saving borrowers money, he said.

Despite a slight drop in prices over the past several months, Lebanon is not considered an area with a declining real estate market and is showing signs of rebounding, all three local professionals said.

"Lebanon is a sound investment. Our prices have remained steady and there are many job opportunities close by," Gillott said. "We have a great location to the I-5 corridor. We have growth in our future with the proposed medical school, and our high school children can qualify to college courses at no additional cost. Lebanon is a friendly caring town. Who wouldn't want to live in here?"